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1) Definition of Workers' Compensation Insurance Fraud

Workers' compensation insurance pays employees who are injured on the job for their medical expenses and lost wages. The Nevada crime of “workers' compensation insurance fraud”…abbreviated “workers' comp fraud”…occurs when someone deliberately tries to bilk the system to get financial benefits they are not entitled to.

There are several types of workers' comp fraud in Nevada depending on who committed the alleged fraud.3 Possible perpetrators are the injured employee (the applicant), the employer, the employees' physicians, or the workers' compensation insurance carrier:

a) Applicant fraud

“Applicant fraud” in Nevada is workers' comp fraud perpetrated by the alleged injured employee. These cases typically involve employees who do -- or attempt to do -- any of the following in order to collect workers' comp insurance:

Fake an injury or exaggerate the extent of their injury,

Falsely claim that an injury occurred on the job, or stage a fake accident,

Fail to disclose a previous injury,

Deny filing previous workers' comp insurance claims,

Collect workers' comp benefits for the same injury from more than one employer, and/or

Illegally work while simultaneously receiving workers' comp benefits.

Note that defendants in applicant fraud cases may face additional charges in Nevada depending on the circumstances of the case. Common related crimes include:

b) Employer fraud

“Employer fraud” in Nevada is perpetrated by employers trying to get out of paying workers' comp insurance premiums. Employer fraud usually involves situations where an employer does one or more of the following:

Lies about the number of his/her employees to the workers' compensation insurance carrier,

Threatens to terminate or punish an employee who tries to claim workers' comp benefits,

Fails to carry workers' compensation insurance, which most employers are legally obligated to have, or

Deducts money from a worker's wages in order to pay for insurance premiums

Another common type of employer fraud is when employers misrepresent their employees' job duties in an effort to pay less expensive premiums.

Example: Mac owns a warehouse in Henderson. His employee Tom's job is to carry inventory around the warehouse, which involves climbing tall ladders and lifting heavy items. But Mac reports to his workers' compensation insurance carrier that Tom has a desk job. Mac lied in order to avoid paying insurance premiums for a high-risk job. Since Mac intentionally lied to the insurance carrier in order to pay a cheaper premium, Mac could be criminally liable for workers' compensation fraud in Nevada.

c) Carrier fraud

Carrier fraud is a fraud perpetrated by the workers' compensation insurance carrier itself. This fraud occurs when the insurance carrier lies about a worker's eligibility to collect benefits in order to pay that worker less money.

d) Claim mills fraud

Organized workers' compensation fraud rings are called “claim mills.” Claim mills are typically comprised of doctors, attorneys and their staff (called “runners,” steerers,” or “cappers”). Claim mills recruit people to file fraudulent workers' compensation claims so the claim mill can share in the benefits.

e) Provider fraud

Provider fraud is when medical providers like doctors take advantage of patients legitimately injured on the job by either:

f) Prosecution of workers' comp fraud in Nevada

Nevada's workers' compensation insurance laws are overseen by Nevada's Department of Business and Industry. Allegations of workers' comp fraud are prosecuted by the Workers Compensation Unit of the Nevada Attorney General's Office. Note that the Attorney General prosecutes not only people who allegedly make false insurance claims … but also anyone who aids or conspires with people to make false claims.4

g) Federal Laws for Workers' Compensation

The U.S. government has its own federal workers' compensation program called the Federal Employees' Compensation Act (FECA).5 Similar to Nevada, it is a federal crime to try wrongfully to obtain FECA benefits by intentionally making false statements or concealing material facts.6

2) Defenses to “Workers' Compensation Insurance Fraud” in Nevada

“Workers' comp fraud is not a strict liability crime; a person should not be found guilty of it if there is no specific intent to defraud.” – Henderson criminal defense attorney Neil Shouse

There are various ways to fight Nevada charges of workers' comp insurance fraud. The best strategy depends on the circumstances of the case. The following are the most common defenses:

a) No intent to defraud. A defendant is liable for workers' comp fraud only if he/she meant to deceive the insurance carrier. Mistakenly overbilling a client or misreporting an employee's position is not illegal. Even working while receiving workers' comp benefits is no crime if the person honestly believed he/she was allowed to do both. Lacking fraudulent intent always exempts the defendant from criminal liability for fraud:

Example: Barbara falls from a ladder at her Home Depot job. At the hospital a doctor looking at the wrong X-rays mistakenly informs Barbara that she has a compound fracture and needs to stay off of her leg for four months. Barbara applies for workers' comp benefits to pay for her four-month leave.

The insurance company conducts an internal investigation and finds that in fact Barbara has only a bad sprain that requires far less bed rest. However Barbara should not be convicted of workers' comp fraud because she honestly and reasonably believed that her injury was more severe than it was. In short, Barbara had no intent to defraud.

b) False accusations. Every workers' comp claim passes through several parties: the worker, the employer, a physician, the insurance company, and many of their office staff. Therefore it may be difficult for police to determine which person(s) perpetrated the fraud:

If one person in an office perpetrated a fraud, the police may presume others in the office are “guilty by association.” And sometimes the defendant may be falsely accused by the person who actually committed the fraud in an effort to save him/herself. As long as the D.A. cannot prove beyond a reasonable doubt that the defendant perpetrated the fraud, the workers' comp charges should be dropped.

c) Police misconduct. Workers' comp fraud cases involve extensive police investigations. If the police fail to follow proper search warrant procedures, then the defense attorney can file with the court a Nevada motion to suppress evidence. This motion explains to the court why the police search was unlawful, and it asks the court to overlook any incriminating evidence found from the illegal police search. If the court grants the motion to suppress, the D.A. may then be forced to dismiss the charges for lack of evidence.

3) Penalties for “Workers' Compensation Insurance Fraud” in Nevada

Workers' comp fraud carries not only prison and fines, it may cost the defendant his/her professional license and livelihood. – Reno criminal defense attorney Neil Shouse

a) Nevada penalties for workers' comp fraud

Most Nevada charges for workers' comp fraud are prosecuted as category D felonies. The punishment includes:

1 – 4 years in Nevada State Prison, and

maybe $5,000 in fines, and

victim restitution in Nevada, including possible repayment of benefits

In addition, the defendant may have his/her professional licenses suspended and revoked. The defendant may also be ineligible to receive future workers' comp benefits.7

b) Federal penalties for workers' comp fraud

The sentence for deliberately trying to defraud FECA is up to 5 years in federal prison and/or up to $10,000 in fines. The defendant will also lose payments for medical expenses, lost wages, and other benefits under FECA.8

Accused of “workers' comp fraud” in Nevada? Call a lawyer…

If you have been arrested for “workers' compensation insurance fraud” in Nevada, call our Las Vegas criminal defense lawyers at 702-DEFENSE (702-333-3673) for a free meeting to discuss your options. We may be able to keep you out of jail and have your charges dismissed or reduced.

Legal References:

Presenting or causing to be presented any statement to an insurer, a reinsurer, a producer, a broker or any agent thereof, if the person who presents or causes the presentation of the statement knows that the statement conceals or omits facts, or contains false or misleading information concerning any fact material to an application for the issuance of a policy of insurance pursuant to this title.

Presenting or causing to be presented any statement as a part of, or in support of, a claim for payment or other benefits under a policy of insurance issued pursuant to this title, if the person who presents or causes the presentation of the statement knows that the statement conceals or omits facts, or contains false or misleading information concerning any fact material to that claim.

Assisting, abetting, soliciting or conspiring with another person to present or cause to be presented any statement to an insurer, a reinsurer, a producer, a broker or any agent thereof, if the person who assists, abets, solicits or conspires knows that the statement conceals or omits facts, or contains false or misleading information concerning any fact material to an application for the issuance of a policy of insurance pursuant to this title or a claim for payment or other benefits under such a policy.

Acting or failing to act with the intent of defrauding or deceiving an insurer, a reinsurer, a producer, a broker or any agent thereof, to obtain a policy of insurance pursuant to this title or any proceeds or other benefits under such a policy.

As a practitioner, an insurer or any agent thereof, acting to assist, conspire with or urge another person to commit any act or omission specified in this section through deceit, misrepresentation or other fraudulent means.

Accepting any proceeds or other benefits under a policy of insurance issued pursuant to this title, if the person who accepts the proceeds or other benefits knows that the proceeds or other benefits are derived from any act or omission specified in this section.

Employing a person to procure clients, patients or other persons who obtain services or benefits under a policy of insurance issued pursuant to this title for the purpose of engaging in any act or omission specified in this section, except that such insurance fraud does not include contact or communication by an insurer or an agent or representative of the insurer with a client, patient or other person if the contact or communication is made for a lawful purpose, including, without limitation, communication by an insurer with a holder of a policy of insurance issued by the insurer or with a claimant concerning the settlement of any claims against the policy.

Participating in, aiding, abetting, conspiring to commit, soliciting another person to commit, or permitting an employee or agent to commit any act or omission specified in this section.

NRS 616D.370 False charges, representations and statements; penalty.

A person shall not, by any act or omission:

(a) Make a charge or cause it to be made knowing the charge to be false, in whole or in part;

(b) Make or cause to be made a statement or representation for use in obtaining or seeking to obtain authorization to provide specific accident benefits pursuant to chapters 616A to 616D, inclusive, or chapter 617 of NRS, knowing the statement or representation to be false, in whole or in part; or

(c) Make or cause to be made a statement or representation for use by another person to obtain accident benefits pursuant to chapters 616A to 616D, inclusive, or chapter 617 of NRS, knowing the statement or representation to be false, in whole or in part.

A person who violates any of the provisions of this section shall be punished:

(a) If the amount of the charge or the value of the accident benefits obtained or sought to be obtained was $650 or more, for a category D felony as provided in NRS 193.130. In addition to any other penalty, the court shall order the person to pay restitution.

(b) If the amount of the charge or the value of the accident benefits obtained or sought to be obtained was less than $650, for a misdemeanor, and must be sentenced to restore any accident benefits so obtained, if it can be done, or tender payment for rent or labor.

(a) While acting on behalf of a provider of health care, purchase or lease goods, services, materials or supplies for which payment may be made, in whole or in part, pursuant to chapters 616A to 616D, inclusive, or chapter 617 of NRS, and solicit or accept anything of additional value in return for or in connection with the purchase or lease;

(b) Sell or lease to or for the use of a provider of health care goods, services, materials or supplies for which payment may be made, in whole or in part, pursuant to chapters 616A to 616D, inclusive, or chapter 617 of NRS, and offer, transfer or pay anything of additional value in connection with or in return for the sale or lease; or

(c) Refer a person to a provider of health care for accident benefits for which payment may be made, in whole or in part, pursuant to chapters 616A to 616D, inclusive, or chapter 617 of NRS, and solicit or accept anything of value in connection with the referral.

Paragraphs (a) and (b) of subsection 1 do not apply if the additional value transferred is:

(a) A refund or discount made in the ordinary course of business;

(b) Reflected by the books and records of the person transferring or receiving it; and

(c) Reflected in the charges submitted to the insurer.

A provider of health care shall not offer, transfer or pay anything of value in connection with or in return for the referral to the provider of a patient for whom payment of accident benefits may be made, in whole or in part, pursuant to chapters 616A to 616D, inclusive, or chapter 617 of NRS.

A person shall not, while acting on behalf of a provider of health care pursuant to chapters 616A to 616D, inclusive, or chapter 617 of NRS, charge, solicit, accept or receive anything of value in addition to the amount legally payable pursuant to any of those chapters in connection with the provision of the accident benefits.

A person who violates any provision of this section, if the value of the thing or any combination of things unlawfully solicited, accepted, offered, transferred, paid, charged or received:

(a) Is less than $650, is guilty of a gross misdemeanor.

(b) Is $650 or more, is guilty of a category D felony and shall be punished as provided in NRS 193.130.

NRS 616D.415 Fraud; conspiracy to commit fraud; penalty.

An employer who knowingly makes a false statement or representation or knowingly conceals a material fact regarding the eligibility of a person claiming benefits under this chapter or chapter 616A, 616B, 616C or 617 of NRS, including, without limitation, information relating to:

(a) The identity of the person; or

(b) The classification of the person as an independent contractor, commits fraud in the administration of this chapter or chapter 616A, 616B, 616C or 617 of NRS or in the provision of compensation required by chapters 616A to 617, inclusive, of NRS, as applicable.

An employer who commits fraud as described in subsection 1 shall be punished as follows:

(a) If the amount of the benefit or payment obtained or attempted to be obtained was less than $250, for a misdemeanor.

(b) If the amount of the benefit or payment obtained or attempted to be obtained was $250 or more, for a category D felony as provided in NRS 193.130.

Any person who conspires with any other person to commit fraud in the administration of this chapter or chapter 616A, 616B, 616C or 617 of NRS or in the provision of compensation required by chapters 616A to 617, inclusive, of NRS as described in subsection 1 shall be punished as follows:

(a) If the amount of the benefit or payment obtained or attempted to be obtained was less than $250, for a misdemeanor.

(b) If the amount of the benefit or payment obtained or attempted to be obtained was $250 or more, for a category D felony as provided in NRS 193.130.

No provider of health care who has been convicted of violating any provision of NRS 616D.370 to 616D.410, inclusive, may, for 5 years after the date of the first conviction or at any time after the date of a second or subsequent conviction, receive or accept a payment for accident benefits provided or alleged to have been provided to an injured employee pursuant to the provisions of chapters 616A to 616D, inclusive, or chapter 617 of NRS.

A person who violates any provision of this section is guilty of a gross misdemeanor.

2 NRS 616D.415; NRS 686A.291 Criminal penalty for insurance fraud. A person who commits insurance fraud is guilty of a category D felony and shall be punished as provided in NRS 193.130.

3 NRS 686A.2815.

4See Perelman v. State, 981 P.2d 1199, 115 Nev. 190 (1999) (Only one crime of insurance fraud has been committed when false multiple statements are made in support of one claim).

5 20 CFR 10.23.

a. Any person who knowingly makes, or knowingly certifies to, any false statement, misrepresentation, concealment of fact, or any other act of fraud with respect to a claim under the FECA or who knowingly accepts compensation to which that person is not entitled, is subject to criminal prosecution and may, under appropriate U.S. Criminal Code provisions (e.g., 18 USC 287 and 1001), be punished by a fine of not more than $10,000 or imprisonment for not more than five years, or both.

b. Any person who, with respect to a claim under the FECA, enters into any agreement, combination, or conspiracy to defraud the United States by obtaining or aiding to obtain the payment or allowance of any false, fictitious or fraudulent claim is subject to criminal prosecution and may, under appropriate U.S. Criminal Code provisions (e.g., 18 USC 286), be punished by a fine of not more than $10,000 or imprisonment for not more than 10 years, or both.

c. Any person charged with the responsibility of making reports in connection with an injury who willfully fails, neglects, or refuses to do so; induces, compels, or directs an injured employee to forego filing a claim; or willfully retains any notice, report, or paper required in connection with an injury, is subject to a fine of not more than $500 or imprisonment for not more than one year, or both.

Moreover, claimants convicted of fraudulently claiming or obtaining benefits under the Federal Employees' Compensation Act (FECA) on or after October 21, 1993, the effective date of Public Law 103-112, will lose entitlement to medical benefits, compensation for wage loss, and any other benefits payable under the FECA.

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